APA Statute of Limitations
Corner Post v. Board of Governors of the Federal Reserve System
Date: July 1, 2024
Issue: Does a plaintiff’s Administrative Procedure Act (APA) claim “first accrue” under 28 U.S.C. § 2401(a) when an agency issues a rule or when the rule injures the plaintiff?
Case Summary: In a 6-3 decision written by Justice Amy Coney Barrett, the U.S. Supreme Court ruled the APA’s six-year statute of limitations does not accrue until the plaintiff is injured by final agency action.
Under Section 2401(a), civil actions against the United States “shall be barred unless the complaint is filed within six years after the right of action first accrues.”
The North Dakota Retail Association, North Dakota Petroleum Marketers Association, and Corner Post (the retailers) sued the Fed in a North Dakota federal district court, seeking to invalidate Regulation II’s standard for reasonable and proportional interchange fees. Regulation II capped the interchange fee received by large issuers ($10 billion or more in assets) to 21 cents plus 0.05% of the transaction. It also allowed a one-cent adjustment if the issuer implements fraud-prevention standards. In 2014, in National Association of Convenience Stores v. Board of Governors of the Federal Reserve System, the D.C. Circuit reversed a lower court decision determining Regulation II violated the APA. However, the D.C. Circuit remanded the issue of the Fed’s treatment of transactions-monitoring costs, concluding the Fed must clarify its exercise of discretion. On Aug. 14, 2015, the Fed published the clarification for transactions-monitoring costs in the interchange fee standard (the clarification).
On April 29, 2021, the retailers filed a complaint raising a facial challenge to Regulation II as a violation of the APA which is contrary to law and both arbitrary and capricious. The Fed moved to dismiss based on the statute of limitations. The district court dismissed, finding the clarification did not constitute a final agency action to renew the statute of limitations; the statute of limitations began to run with the publication of Regulation II in 2011; and the retailers’ claims did not warrant equitable tolling. On appeal, an Eighth Circuit panel affirmed, ruling the claims were barred by the statute of limitations.
The Supreme Court reversed and remanded, ruling the statute of limitations for APA claims starts to run on the date on which the challenged agency action first injures the plaintiff, rather than the date on which a rule or order was promulgated. Writing for the majority, Justice Barrett interpreted 28 U.S.C. § 2401, which sets a six-year time limit that starts when a claim “first accrues.” The Court has long held that a claim “accrues” only after the plaintiff suffers the injury required to press her claim in court. The majority observed that this default meaning applies unless Congress has expressly indicated otherwise in the statute’s text, such as where Congress establishes a “repose” period tied to the date of the challenged action. The majority reasoned this reading was strengthened by language in other statutes authorizing judicial review of administrative action, where Congress explicitly tied claim accrual to the promulgation of a final rule. Accordingly, the majority proclaimed a cause of action does not become “complete and present” for limitations purposes until the plaintiff can sue and obtain relief.
The majority further rejected the government’s policy arguments, concluding the plain text controls and that the policy implications were overstated. The majority rejected the Fed’s argument that successful facial challenges filed after six years upset the reliance interests of those having long operated under existing rules. The majority emphasized pleas of administrative inconvenience never justify departing from a statute’s clear text.
In concurrence, Justice Brett Kavanaugh noted he agreed with the Court’s decision declaring APA claims accrue when the plaintiff is injured by the challenged agency rule. However, Justice Kavanaugh noted that the retailers can obtain relief because the APA authorizes vacatur of agency rules. In dissent, Justice Ketanji Brown-Jackson cautioned that “even the most well-settled agency regulations can be placed on the chopping block.”
Bottom Line: The Corner Post decision will litigation against regulatory agencies, including challenges to federal regulations dating back decades.
Document: Opinion
